Chapter 6 - Human Capital Flashcards
Quality of labour can vary
In USA those judged to have been in top third of looks earned 5% more than otherwise identical average person
Human capital and physical capital similarities
- focus on productive qualities
- it is produced
- it earns a return
- it depreciates
Health has a productive side
Healthier people work harder and longer and can think more clearly and learn better
People get taller
French men 1810 to 1980 rose 12.6cm and
Daily per capita supply of calories 1846 in 1800; 3375 by 1980
- In USA a 1 inch increase in adult height is associated with more than 1.4% increase in weekly earnings
Robert Vogel nutrition and economic growth
- bringing people into labour force who would have been too weak to work
-people who were working had to work harder - improved nutrition can be seen as having produced slightly less than 1/3 of overall growth in income
Inequalities in food distribution
- in 2018 some 678 million people worldwide didn’t have enough food to eat
- poorest part of country is malnourished in richer countries too
The interaction of health and income
-nutrition is a contributor to but also result of higher income
-both are endogenous variables
-
Relative importance of differences in health/income curves
- almost all relative ill health in poor countries is because of being poor
- health differences would persist even if two groups of countries had same levels of income per capita
Education
- in 2018 the US government spent $896 billion on education, and private individuals spent another $288 billion total 5.7% of GDP
-21% of US GDP invested in physical capital in 2018
Malaria
- 231 million episodes of malaria resulting 643,000 deaths
-sub Saharan Africa represented 91% of global episodes
-1.5 billion malaria causes and 7.6 million malaria deaths were averted globally over period 2000-2019
Similarities b/w physical and human capital for education
- both require investment to create and both have economic value
- BUT HC cannot be separated from people
Effect of education on wages
- 13.4% for first 4 years of schooling
-10.1% per year for next 4 years
-6.8% per 8 years
Raw Labour
What workers would have earned if they did not possess any human capital
HC share of wages
-worker with fewer than 5 years of education HC share of wage < 45%
-more than 5 years of education share of wage > 45%
HC in wages in developing countries
In developing world the share of national income that flows to human capital is greater than share earned by physical capital
